Labeling Concessions: How to Make the Most Impact on Your Counterparty

In a typical negotiation, both sides start by wanting different things. If no one makes concessions, there can't be an agreement. Giving up something you want signals to the other party that you're willing to cooperate, and it encourages them to trust you, come closer to a deal, and even offer you something in exchange. 

If the concession you make doesn't seem valuable to you, it's a weak motivator for them. You should decide which concessions you're willing to make beforehand and maximize their impact at the table. 

Always Label Your Concessions

If you make a concession without explaining its value, your counterparty can easily downplay or overlook it. It should always be clear to the other party that any concession you make has cost you and benefitted them. This is what encourages them to reciprocate.

Let's say, for example, that your vendor is asking for a larger up-front deposit than you originally offered. Even if you've factored that deposit into your acceptable budget, you want to communicate that the extra deposit puts a strain on you, but you're willing to do it for them. This encourages them to offer you the free shipping or complimentary extras you actually want. 

Offer Concessions Reluctantly

Most people assume that if you really want something, you'll hold onto it as long as you can. Offering a big concession right at the start might seem like a way to signal goodwill or streamline the negotiation, but it leaves your counterparty thinking you must have more to offer. You could be perceived as stingy or uncooperative later in the negotiation when you don't have anything left to give.

Another mistake is starting with small compromises and working your way up. This gradual increase can signal to your counterparty that if they keep pushing, they'll get bigger rewards. Instead, you want to wait until the negotiation is well underway, offer your largest concession, and then reduce the amount you're willing to budge as the negotiation continues. This indicates you're moving closer to your limit. 

You can keep requesting trade-offs and concessions until the contract is signed. It fosters goodwill in your counterparty and makes them more willing to agree to last-minute concessions if the contract looks as good as possible. Take the extra time to run it through a PDF file merger, and make absolutely sure every concession you've offered is written down in one concise file. Showing the counterparty you've paid attention to the quality of the contract encourages them to accept minor changes in your favor. 

Concessions Drive a Negotiation

Concessions are the only way for two parties with opposing goals to come to a solution. No one likes to feel they're the only ones giving ground, so when you offer concessions as a negotiator, it's important to label them and offer them relatively late in the negotiation. These are ways to communicate to the other party that the concessions matter to you. It's much easier to build trust and foster cooperation with business leaders when you have a preexisting relationship.

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